JULY BAD FAITH CASES
TRANSFER OF VENUE GRANTED FOR BAD FAITH CLAIM WHERE PUBLIC AND PRIVATE INTERESTS BALANCED IN FAVOR OF TRANSFER (Philadelphia Federal)

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Transfer of venue was requested for breach of contract and bad faith claims brought by the insured which allege that the insurer failed and refused to pay a claim for benefits owed under the insured’s policy. The insured is a Pennsylvania corporation  while the insurer is incorporated in Texas.  However  the insurer is licensed to issue policies of insurance in Pennsylvania and regularly conducts business in the City and County of Philadelphia.  The insured originally filed the claims in the Court of Common Pleas of Philadelphia County. The insurer filed a notice of removal in the Middle District of Pennsylvania.

The insured field a motion to transfer this matter to the Eastern District of Pennsylvania which was granted.

The insurer then filed a motion to transfer claiming that venue should be laid in the Middle District, rather than in the Eastern District. The court found that under 28 U.S.C. section 1406 venue is proper in the Eastern District because the insurer carries on a continuous and systematic part of its general business in this district and is subject to general personal jurisdiction there.

Therefore the court refused to transfer this case under section 1406 because the insurer resides in the Eastern District and venue is proper there.

However even though the Eastern District is a proper venue for the insured’s claims the court transferred the case to the Middle District under 28 U.S.C. section 1404(a).

The court found that venue in the Middle District would be proper for this case because the insurer is subject to general personal jurisdiction throughout Pennsylvania and thus is a resident of the Eastern District as well as the Middle District.  Also the insured’s principal place of business is in the Middle district, the Middle District is the situs of the contract, and the relevant insured premises that gave rise to the claim are also located in the Middle District.  A substantial part of the events giving rise to the claim occurred in the Middle District making venue proper in the Middle District.

The sole factor weighing against the transfer of this action is that the insured’s preference is the Eastern District.  While the court acknowledges that great deference should be given to this factor, this preference is outweighed by the countervailing interests favoring transfer to the Middle District.

Therefore even though venue for the insured’s claims is proper in the Eastern District a balancing of private and public interests under section 1404(a) moved the court to transfer the claims to the Middle District.

Date of Decision: February 8, 2008

Bromily, Inc. v. State Nat’l Ins. Co., U.S. District Court Eastern District of Pennsylvania NO. 08-cv-340, 2008 U.S. Dist. LEXIS 9427 (E.D. Pa. Feb. 8, 2008)(Katz, J.)

J.M.A.

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TRANSFER OF VENUE GRANTED FOR BAD FAITH CLAIM WHERE PUBLIC AND PRIVATE INTERESTS BALANCED IN FAVOR OF TRANSFER (Philadelphia Federal)”


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